Decisions on Bank Applications
Union Credit Bank
FEDERAL DEPOSIT INSURANCE CORPORATION
In Re: Union Credit Bank
Miami, Miami-Dade County, Florida
Application for Federal Deposit Insurance (Bank Insurance Fund)
Pursuant to the provisions of Section 5 of the Federal Deposit Insurance Act (12 U.S.C. 1815), an application for Federal deposit insurance has been filed on behalf of Union Credit Bank, a proposed new state nonmember bank with membership in the Bank Insurance Fund, with the main office to be located at 1150 South Miami Avenue, Miami, Miami-Dade County, Florida.
The applicant is being organized as a commercial bank primarily serving the area bounded by Biscayne Bay, one-half mile to the east; SW 87th Avenue, seven miles to the west; Flagler Street, one mile to the north; and Kendall Drive, five miles to the south. The proposed main banking facility will be located one block west of Brickell Avenue, a major business district that is heavily traveled and which contains most of the area financial institutions providing international financing and private banking services. The proponents plan to exploit their personal and business contacts to target the small to medium sized businesses within their primary service area for both domestic, international finance, and private banking products.
Banking competition in Miami-Dade County is significant. The county is also ranked as the second largest international finance center in the United States. It had over 45 foreign banks with total deposits of $12.6 billion in 1998 and $2 billion over 1997. Total deposits for 57 commercial banks and 12 savings institutions in June 1999 were approximately $40 billion.
Mr. Odde Rishmague, who is a Chilean citizen and resident, will directly own 100% of the outstanding shares of the bank and will be a director of the bank. His son, Miguel Rishmague, a Chilean citizen and lifelong resident of Miami, Florida, will serve as Chairman of the Board. Mr. Odde Rishmague's financial statement reflects ownership of real property, control ownership, and accounts receivable from several companies that are domiciled in Chile. These companies own or have accounts receivables from and to various other companies throughout South America.
Since Mr. Rishmague is a Chilean national and has the ability to remove himself from the jurisdiction of United States Courts, the Corporation is imposing a condition whereby he enters into an agreement to be subject to United States jurisdiction on domestic banking issues. Also, he will establish a registered agent in the United States for service of process.
Most of Mr. Rishmague's other business interests are located in Chile and other South American countries. These interests would be subject to the applicable restrictions and limitations of Sections 22(g), 22(h), 23A, and 23B of the Federal Reserve Act or other applicable Federal or State regulations. However, monitoring their financial conditions could be difficult, as well as the impact on Union Credit Bank transactions with these companies might have, since their financial statements are typically portrayed in other currencies, with notes in Spanish. Therefore, the Corporation is imposing the condition requiring Mr. Rishmague to maintain at the bank current, audited financial information on all affiliates of the proposed bank, in United States Dollars and written in English.
Mr. Rishmague has a close business association with a group of financial institutions located in Chile, Peru, and Venezuela known as "Corp Group" and their principal owners, by virtue of his or his companies' equity interests in their parent holding company and intercompany borrowings. Corp Group includes Corp. Group Holding Ltd. and its subsidiaries and Corp Group Investments and its majority owned companies. His interests in these companies do not meet the definition of an affiliate or related interest. Mr. Rishmague has stated that financial transactions between Union Credit Bank and the Corp Group are not anticipated. However, Mr. Rishmague has committed that Union Credit Bank shall seek FDIC's prior written approval of any future transactions between Union Credit Bank and any of the companies controlled, directly or indirectly, by Mr. Rishmague and/or the Corp Group and that any such transactions, in the case of Corp Group, will strictly comply with all requirements of Sections 23A and 23B of the Federal Reserve Act, as if they were identified affiliates of Union Credit Bank.
The proposed investment in fixed assets is reasonable, capital is adequate, earnings prospects are considered sufficient to provide a profitable operation within a reasonable period of time, and management is considered to be satisfactory.
Accordingly, based on a careful evaluation of all facts and information, the undersigned, acting on authority delegated by the Board of Directors of the Corporation, has concluded that approval of the application is warranted.
FEDERAL DEPOSIT INSURANCE CORPORATION
DIVISION OF SUPERVISION
The undersigned, acting on behalf of the Board of Directors of Federal Deposit Insurance Corporation (FDIC) pursuant to delegated authority, has fully considered all available facts and information relevant to the factors of Section 6 of the Federal Deposit Insurance Act and relating to the application for Federal deposit insurance for Union Credit Bank, a proposed new State nonmember bank to be located at 1150 South Miami Avenue, Miami, Miami-Dade County, Florida and has concluded that the application should be approved.
Accordingly, it is hereby ORDERED that the application submitted by Union Credit Bank for Federal deposit insurance be and the same is hereby approved subject to the following conditions:
(1) That beginning paid in capital funds of not less than $10,000,000 be provided, of which not less than $5,000,000 shall be allocated to common capital and not less than $4,500,000 to surplus;
(2) That any changes in proposed management or proposed ownership (10% or more of stock), including new acquisitions of or subscriptions to 10% or more of the stock, will render this commitment null and void unless such proposal is approved by the Corporation prior to opening of the bank;
(3) That an accrual accounting system be adopted for maintaining the bank's books;
(4) That prior to the effective date of Federal deposit insurance sufficient surety bond coverage on the bank's active officers and employees to conform with generally accepted banking practices and an excess employee dishonesty bond in the amount of at least $1,000,000 will be obtained if the primary coverage is less than $1,000,000;
(5) That the bank obtain an audit of its financial statements by an independent public accountant annually for at least the first three years after deposit insurance coverage is effective, furnish a copy of any reports by the independent auditor (including any management letters) to the Atlanta Regional Office within 15 days after their receipt by the bank, and notify the Regional Office within 15 days when a change in its independent auditor occurs;
(6) That Federal deposit insurance shall not become effective unless and until the applicant has been established as a State bank (not a member of the Federal Reserve System), that it has authority to conduct a banking business, and that its establishment and operation as a bank have been fully approved by the State Authority;
(7) That the bank shall operate within the parameters of the business plan submitted to the FDIC. Furthermore, during the first three years of operations, the bank shall notify the Regional Director of any proposed major deviation or material change from the submitted plan 60 days before consummation of the change;
(8) That prior to opening the Bank, a registered agent in the United States for service of process shall be established for Mr. Odde Rishmague, and he will enter into a written agreement with the FDIC whereby he will agree to be subject to United States Court jurisdiction on domestic banking issues;
(9) That Mr. Odde Rishmague agrees to maintain current and fully descriptive financial information, including income statements and balance sheets denominated in United States Dollars and written in English, on all affiliates (of the proposed Union Credit Bank) domiciled outside of the United States, and agrees to make this information available at the proposed bank for examiner review. The information shall be audited by an accounting firm acceptable to the Regional Director and the information will at all times be no more that 18 months old;
(10) Mr. Odde Rishmague agrees that Union Credit Bank shall seek FDIC's prior written approval of any future transactions between Union Credit Bank and any of the companies controlled, directly or indirectly, by Mr. Rishmague and/or the Corp Group and that any such transactions, in the case of Corp Group, will strictly comply with all requirements of Sections 23A and 23B of the Federal Reserve Act, as if they were identified affiliates of Union Credit Bank. Corp Group includes Corp Group Holding Ltd. and its subsidiaries and Corp Group Investments and its majority owned companies;
(11) That until the bank is established, the Corporation shall have the right to alter, suspend, or withdraw the said commitment should any interim development be deemed to warrant such action; and,
(12) That if deposit insurance has not become effective within twelve months from the date of this ORDER, or unless, in the meantime, a request for an extension of time has been approved by the Corporation, the consent granted shall expire at the end of the said twelve month period.Dated at Washington, D. C., this _________day of _________________, 2001.
FEDERAL DEPOSIT INSURANCE CORPORATION
DIVISION OF SUPERVISION